Wyoming's Oil and Gas Conservation Commission (WOGCC) is about to release proposed rules to double the money oil and natural gas operators set aside to pay for the abandonment and plugging of old wells.

Industry officials said they are waiting for the WOGCC to release the proposed bonding changes for a state-mandated 45-day comment period. Business news reports indicate the commission has given initial approval and the changes will only require one more vote, following the comment period.

The goal is to plug more than 1,200 abandoned wells on state and fee lands (see Daily GPI, Feb. 3, 2014).

The new regulations would increase the amount of bonding fees companies would have to pay from $75,000 to $150,000. A representative from the Petroleum Association of Wyoming (PAW) told NGI that is in line with what surrounding oil and gas producing states require.

Larger operators generally aren't a problem, but state officials, such as Oil/Gas Supervisor Mark Watson, have said smaller firms can be problematic in terms of properly abandoning wells. The state doesn't want to be in the well-plugging business, Watson said, but in recent years there has been a backlog of up to 1,200 abandoned wells needing work. Landowner and environmental interests want the state to do more.

Watson confirmed the bonding changes are moving forward, but he clarified that there will be no changes to the state rules for plugging abandoned wells.

"We haven't seen the language yet, but from the discussions we have had I am not getting a tremendous amount of push back from our members, but we have to wait to see the actual written regulations," said John Robitaille, PAW vice president. "This would double the cost of statewide bonding. Most of our folks are on board with it. It is really just bringing us up to what other states require."

While Robitaille doesn't see it as "highly significant," he said PAW wants to know what the new language says. He said it is expected very soon.

A spokesperson for Gov. Matt Mead, who chairs the WOGCC, did not immediately respond to NGI's inquiry about Mead's position is on the proposed changes.

Last year, the WOGCC retained a contractor to kick-start a long-delayed effort to plug abandoned oil and natural gas wells (see Daily GPI, May 14, 2014). "This latest move is addressing those issues that we saw in previous years where we ran into a pretty significant issue with a company that bought a bunch of coalbed methane wells and promised to bring their bonding and the wells to the appropriate level, but they simply never did that," Robitaille said. "The WOGCC brought this to the industry two years ago and said it was going to be looking at this.”

Last year Gillette, WY-based Pluggin Along LLC was one of the lead contractors in a state bidding program on groups of abandoned wells, completing reclamation work on up to 141 wells in the Ucross and Spotted Horse areas of Sheridan and Campbell counties. Pluggin Along President Tom Roberts told NGI Wednesday that his company failed to be the low bidder on the first two rounds this year, but was the winner on the third phase, and should complete up to 200 wells for the state this year.

In the past, PAW has been fully supportive of the efforts originally launched in 2013 (see Daily GPI, Dec. 11, 2013).

West Coast Correspondent | Los Angeles, CARichard Nemec began writing for NGI in 1995 and has 30 years experience in the energy industry. He holds BA from the University of Southern California, Los Angeles; and a MA in journalism from Northwestern University, Evanston, IL; and completed MBA courses at Northwestern's Evening Graduate School of Management.
rich.nemec@naturalgasintel.com

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